Wall Street says forget about the jobs — Apple's big announcement is all about a tax windfall

Apple on Wednesday said it planned to spend $38 billion in taxes on its overseas holdings, which comprise$250 billion in cash and securities.

Analysts are pumped and believe Apple will return a substantial amount of its money to shareholders.

Apple has about $250 billion in overseas cash, and though the company hasn't said it will bring it all home and return it to shareholders, that's what Wall Street analysts heard in Wednesday's big announcement.

Apple made a variety of announcements Wednesday, including a new campus and a plan to hire 20,000 employees. But one important number the iPhone giant revealed was seized on by analysts: $38 billion, or the amount of tax Apple will pay on its overseas holdings, implying that it plans to bring all of its overseas money back to the US.

That makes Wall Street optimistic that Apple could spend a ton on dividends and buybacks. One analyst from Wells Fargo even suggested that Apple could spend $70 billion this year on share buybacks.

Apple usually announces its capital-return plans in March.

Here's what Wall Street is saying about Wednesday's announcement and what it means for Apple shareholders:

Nomura: BEARISH

Rating: Neutral

Price target: $175

Comment: "Apple will pay $38bn in taxes to repatriate its international cash. Using a 15.5% rate on overseas cash, this implies Apple will repatriate virtually all of its $252bn in overseas cash. We estimate the company generates ~$30bn in overseas cash annually; thus, we do not expect Apple to be short of cash internationally. There was much commentary about jobs and reinvestment; Apple is of course a major and growing contributor to the US economy. In our view, the tone suggests its primary target was not the financial community."

Piper Jaffray: BULLISH

Rating: Overweight

Price target: $200

Comment: "We believe much of this investment spend by Apple was likely to occur regardless of the more favorable taxation of repatriated offshore cash, but totaling up the contribution and sharing the outcome is a strong PR move and follows a similar announcement from Amazon, which announced plans to hire 100k full-time employees by mid-2018."

RBC: BULLISH

Rating: Outperform

Price target: $200

Comment: "At 15.5% tax rate, this implies AAPL plans to bring back gross $245B ... We view this positively and think that almost all of it will be deployed for buybacks/dividends, given AAPL's strong capital structure and very low cost of debt."

Wells Fargo: BULLISH

Rating: Market Weight

Price target: $195

Comment: "With ~$250B in cash coming back to the U.S., and given Apple's strong [free cash flow], could we consider Apple spending $70B+ per annum on share repurchase? $70B/annum in share repo at this price would equate to ~400M shares, or roughly 8% of total shares outstanding."

Bank of America Merrill Lynch: BULLISH

Rating: Buy

Price target: $220 (upgraded)

Comment: "If the repatriation tax rate is reduced to 15.5% from the current 35%, then Apple should be able to repatriate substantially all of its foreign cash, without provisioning for additional taxes, by paying out the deferred tax liability already on its balance sheet. After paying out the taxes, Apple would have $200mn of cash back on-shore in the U.S. (which it could potentially use for buybacks, dividends, or M&A)."

Longbow: BEARISH

Rating: Neutral (downgraded)

Price target: NA

Comment: "AAPL is a significant beneficiary from tax reform with $250B+ of trapped cash as of September. Each $20B of the estimated $250B in trapped cash once repatriated utilized toward an accelerated/expanded buyback adds $0.30 to annual EPS. In addition, each 100 basis points of tax rate reduction adds $0.15 to annual EPS."

Baird: BULLISH

Rating: Outperform

Price target: $190

Comment: "Apple plans to contribute $350 billion to the U.S. economy over the next five years in the form of direct employment, investment in domestic suppliers and manufacturers, and accelerating efforts in support of coding education. For perspective, the company plans to spend $55 billion on an apples-to-apples basis in 2018, which implies gradual increases in the ensuing years, and includes signification data center expansion."

Macquerie: BULLISH

Rating: Outperform

Price target: $188

Comment: "AAPL being a substantial beneficiary of U.S. tax reform is no surprise, rather the perennial discussion is around where AAPL will put its windfall to work. With today's announcement AAPL began publicly laying the groundwork of its U.S. investment plans focusing on cash repatriation, spending with domestic suppliers and manufacturers, Capex including a new campus and additional data centers, strategic investments in U.S. partners, and the broadening of the app economy. All worthwhile investments that we view favorably, but we do worry about how political pressures may influence spending in such a way that they may not be optimal for shareholders."

Guggenheim: BULLISH

Rating: Buy

Price target: $215

Comment: "Apple will increase the size of its Advanced Manufacturing Fund to $5B from $1B, which it started a year ago to support what it sees as innovative American manufacturers in its supply chain, following initial projects having been so far announced with Corning in Kentucky (e.g., making Gorilla Glass) and Finisar in Texas (e.g., making VCSEL wafers used for 3D sensing cameras in the new iPhone X). Apple has vertically integrated certain components over the years (e.g., Ax mobile processor design, capacitive touch, SSD controllers) but also long used its large cash position as a strategic supply-chain lever, backing things like LCD and memory manufacturing capacity/building lines for certain suppliers."